Volvo Latest To Eye North American Plant

Volvo is the latest automaker to reveal it’s considering moving production of some of its cars to North America, namely, to escape currency fluctuations that can hurt profitability.

Currently, most of Volvo’s models sold in the U.S. are built in Europe but in the future we may see Volvo build cars in the U.S. or Mexico or perhaps even Canada.

The information was revealed by CEO Stefan Jacoby, who told Automotive News (subscription required) that his company will use the next two or three years to decide whether it should build a new plant in North America.

"Obviously one of our weaknesses is that we depend too much on the euro, and we have to take the U.S. dollar and euro equation into consideration," Jacoby explained. "We need to solve that problem; we need to solve that part of the strategy."

Moving production to areas where the bulk of its models sold will not only help with logistics, meaning cars could be delivered to customers faster, but it may also mean lower production costs, especially if a plant is established in low cost countries such as Mexico or close to suppliers.

Already confirmed are plans to invest up to $11 billion worldwide by 2016 to further boost Volvo’s sales in emerging markets such as China and India. The automaker is hoping to double sales from current levels to around 800,000 per annum by 2020. For the U.S., this would mean an increase in sales to around 120,000 per annum.

To increase its sales to those levels, Volvo is looking to add a new small car to replace its current C30 and V40 models once they reach the end of their respective cycles. Both cars are based on aging platform developed by Volvo with its former parent Ford. Once again, Volvo is seeking a partner for the development of its next-generation small car platform, and Jacoby has previously said that he's already in discussion with potential firms.